Costa Rica reject ICE-Huawei's Contract - May Ask for New Bidders

Updated:2008/8/27 11:12

Costa Rica's monopoly GSM network operator, Instituto Costarricense de Electricidad (ICE) has decided not to accept a sole bid from China's Huawei for the supply of a 3G network - and will consider retendering the contract. The company has come under political pressure from the Costa Rican president, Oscar Arias to reject the contract.

Both Nokia and ZTE withdrew from the tender process and Huawei's own bid was roughly double the estimate that ICE had proposed. ICE had expected to spend around US$225 million on the 3G upgrade - but Huawei tendered a contract costing nearly US$583 million for 1.5 million 3G lines.

There have been concerns in the government that the company tendered a high bid due to the lack of competitors for the contract.

If the contract is offered for re-tendering, then it could take several months and push back the hoped for launch of 3G services to 2010.

The recent passage of the General Telecommunications Law (LGT - Ley General de Telecomunicaciones) has also cleared the way for the entrance of new competitors into the Costa Rica mobile market. It is expected that any new entrants into the market will leap directly to offering 3G services.

The Mobile World subscriber database estimates that ICE ended the first quarter of this year with some 2.48 million subscribers, including some 80,000 customer on legacy AMPS and TDMA networks.